World Bank Economic Update for Mauritania: Growth Slows Despite Stabilized Economy

Inflation fell faster than anticipated to 5% from 9.6% the previous year, thanks to lower international food and energy prices and reduced capital goods imports.

The World Bank has released its seventh edition of the Economic Update for Mauritania, revealing a slowdown in economic growth for 2023, despite improvements in macroeconomic stability. Growth decelerated to 3.4% (0.7% per capita) from 6.4% (3.7% per capita) in 2022. This deceleration is attributed to tighter monetary policies and weak performance in sectors such as rainfed agriculture and extractive industries. Nevertheless, Mauritania's growth rate remains above the global average of 3% and the sub-Saharan Africa average of 2.9%.

Inflation fell faster than anticipated to 5% from 9.6% the previous year, thanks to lower international food and energy prices and reduced capital goods imports. The current account deficit decreased, and the fiscal deficit narrowed to 2.5% of GDP, supported by reduced capital expenditure.

The medium-term outlook is positive, with growth projected at 5.4%. To achieve sustainable growth, addressing structural challenges is essential. This includes enhancing public financial management, optimizing labor utilization, and establishing a more stable tax base.

The report emphasizes the low utilization of human capital in Mauritania, where children born in 2024 are expected to use only 15% of their human capital potential by age 18. Addressing barriers to effective human capital use is crucial, particularly for youth, women, and educated workers. Key areas for improvement include closing gender gaps, empowering women in the workforce, and expanding educational and economic opportunities for youth.

To address these challenges, the report suggests several priority reforms:

Enhancing the Quality of Education and Vocational Training: Aligning education and training with labor market needs.

Improving Employment Prospects and Supporting Entrepreneurship: Boosting job opportunities and supporting new business ventures.

Reforming Budget Programming and Execution: Adopting a prudent and transparent tax framework.

Optimizing the Labor Market Information System: Improving labor market data and analysis.

Ibou Diouf, World Bank Resident Representative in Mauritania, commented, "Although Mauritania has made significant strides in macroeconomic stability, addressing structural challenges is crucial for long-term growth. By maximizing human capital and optimizing public finance management, Mauritania can consolidate its progress and foster more sustainable and inclusive growth."